On the other hand, ultra-high dividend exchange-traded funds (ETFs) that utilize a covered call strategy based on these stocks have shown low performance.
On the 14th (local time), Coinbase closed at $394.01, up 58.68% this year on the New York Stock Exchange. Stratis finished trading at $451.02, a 55.73% surge during the same period.
However, the total return yield of the 'YieldMax Coin Option Income Strategy' (CONY) ETF, which seeks high dividends through a covered call strategy while investing in Coinbase, was only 25.86%. The CONY stock price has fallen by 25.15% this year. Although the annual dividend yield over the past year reached 129.73%, it has failed to reflect stock price returns in a rising market.
The covered call ETF 'YieldMax MSTR Option Income Strategy' (MSTY), which uses Stratis as its underlying asset, showed a similar trend. The total return yield of MSTY was only 44.29%, and its stock price has decreased by 14.15% this year.
This is due to the structural characteristics of covered call ETFs. Covered call ETFs operate by giving up a certain portion of the underlying asset's upside potential and selling call options. In particular, covered call ETFs that invest in a single stock can incur significant losses for the entire ETF if the stock price of that particular asset plummets.
[Reporter Jung Yoo-jung]
